Home flips dropped 1.5% in home sales from the first quarter of 2022 to the second, and the gross profit from sales is up 10%, according to a new report released this week by ATTOM.
ATTOM’s second quarter 2022 U.S. Home Flipping Report found that 115,198 single-family houses and condominiums in the United States were flipped in the second quarter, 8.2% of all home sales. While this is down from the 9.7% of Q1, it’s still up from 5.3% from Q2 of 2021.
Profits overall rose from Q1 to Q2, however typical profit margins are still down from previous years. The gross profit on typical transactions rose from $67,000 to $73,700, which is up 10.1% from $66,944 in Q2 2021. Typical profit margins saw a 29% return on investment, which is up from the 25.8% of Q1 but down from the 33% of 2021.
Key highlights:
- One in five counties have a home-flipping rate of at least 10 percent, which is down from a third of all counties in Q1.
- Home flipping rates dropped in 80% of local markets, with the largest rates in Tucson, Arizona, at 14.5%; Phoenix, Arizona, at 14.1%; Jacksonville, Florida, at 13.8%; Atlanta, Georgia, at 13.6% and Gainesville, Georgia at 13.5%.
- The smallest home-flipping rates were in Honolulu, Hawaii, at 1.7%; Hilo, Hawaii, at 3.1%; Wichita, Kansas, at 3.5%; Bremerton, Washington, at 4% and Seattle, Washington, at 4.3%.
- Profit margins increased in 60% of local markets, with the largest increases in Huntsville, Alabama, up from 18.2% to 84.5%; Tallahassee, Florida up from 42.1% to 94.6%; Buffalo, New York, up from 88.2% to 133.3 %; Canton, Ohio, up from 22.8% to 63.9% and Fort Smith, Arizona, up from 38.7% to 76.6%.
- Raw profits remain highest in western and northeastern regions, led by San Jose, California, at $292,500; San Francisco, California, at $250,000; Salinas, Calfornia, at $203,125; San Diego, California, $177,000 and Seattle, Washington, at $174,999.
- The South and Midwest had the lowest raw profits, with the smallest in Tyler, Texas, at $4,000; Jackson, Mississippi, at $5,223; Lafayette, Indana, at $15,518; Boise, Idaho, at $20,133 and Lexington, Kentucky, at $23,500.
Major takeaway:
“The second quarter was another strong showing for fix-and-flip investors. The total number of properties flipped was the second-highest total we’ve recorded in the past 22 years, and the median sales price of a flipped property—$328,000—was the highest ever,” said Rick Sharga, executive vice president of market intelligence for ATTOM. “The big question is whether the fix-and-flip market will begin to lose steam as overall home sales have declined dramatically over the past few months, and the cost of financing has virtually doubled over the past year.”
Added Sharga, “Fix-and-flip activity is mirroring overall housing market trends, with much of the activity, and the highest returns largely coming from the West and Southeast. In fact, even though the highest gross profits came from the most expensive states, 14 of the 18 states where flips accounted for a higher percentage of overall home sales than the national average were in the South, Southeast, and Western states.”
For the full report, click here.
